ProSieben, Discovery to build German TV streaming platform

MUNICH/FRANKFURT (Reuters) - ProSiebenSat.1 Media and and Discovery Inc plan to join forces to build a German TV streaming platform to challenge U.S. giants Netflix (NFLX.O), Amazon Prime and YouTube.

The 50-50 partnership would be based on the existing 7TV alliance formed last year, and bring in ProSieben’s Maxdome video-on-demand offering and Discovery’s Eurosport Player, the partners said on Monday.

It marks the first strategic move by ProSieben’s new CEO Max Conze, who took charge on June 1 after his predecessor was undone by weak advertising revenues at the Munich broadcaster’s core free-to-air channels.

“It is our clear vision to build the one central platform for TV and video content in Germany with the best live and on-demand content,” Conze told Reuters in a written interview.

He said the platform aimed to reach 10 million users around two years after its launch in the first half of 2019, offering a low-cost advertising-free service as well as premium tiers with access to exclusive sports and films.

Still, achieving scale is likely to prove a challenge: Amazon has a market share of 26.8 percent of paid video on demand in Germany, Netflix 22.4 percent and Maxdome only 4.3 percent, according to figures from Goldmedia Custom Research.

The figures measure viewer access, and not subscription numbers. Typically, three people share a single Netflix subscription, according to Goldmedia.

Competition is also heating up in European sports streaming, after British media group Perform this month clinched broadcasting rights for Italy’s Serie A soccer for around 600 million euros (£528.9 million).

JOIN THE CLUB

Conze invited European competitor RTL and German public broadcasters ARD and ZDF to join. ProSieben and RTL compete head to head in Germany, the largest TV market in the European Union.

Responding, RTL’s German unit said it was “fundamentally open to cooperation and alliances” but did not directly take up Conze’s offer.

CEO Bert Habets earlier told the Frankfurter Allgemeine Zeitung that RTL planned to expand its video-on-demand offering in its main markets of Germany, France, the Benelux countries, Hungary and Croatia.

“Our goal is clear: As market leader in European free TV we want to be among the top three in these countries in the on-demand arena,” Habets told the FAZ.

ARD declined to comment. No comment was available from ZDF.

Earlier attempts to form a similar streaming alliance were opposed by Germany’s anti-trust regulator, but the deal’s backers say that a major shift in audience habits - towards on-demand and mobile viewing - could lead to a change of heart.

Discovery, for its part, wants to reach more international viewers in its quest to become the global leader in real-life entertainment and international sports, President and CEO David Zaslav said in a joint statement.

Discovery last year acquired Scripps Network Interactive for $14.6 billion, including debt, in a deal that added lifestyle channels popular with female viewers to its stable of natural history and sports channels watched mainly by men.

“We are building a world-class streaming service to nourish superfans in one of our most important international markets, while also creating a new model for the future for viewers to enjoy their favourite content,” said Zaslav.

The joint venture will be headed by Alexander Vassilev, a former Google and YouTube executive.